It’s been said that most people spend more time planning their next vacation than they do laying the groundwork for their retirement. For some it is a matter of denial about life after work. Other individuals blessed with good health are putting off considering it; a feisty few plan never to retire. A couple of years ago, my father-in law got a new job and signed a five-year contract at the age of 92  He is a judge and very enthusiastic about helping public officials with difficult decisions regarding ethical matters. His 86-year-old physician wife is never home because of her work building support communities for AIDS victims and their families in Soweto, South Africa. 

Are you comfortable with your retirement plans? 

If your answer is "no", you have a lot of company. According to a study we conducted with TIAA-CREF Institute, based on interviews with 1,000 nonprofit employees coast to coast, about 45 percent of the employees in our sector are also unsure of themselves when it comes to retirement planning. And many employers are at a loss as to how adequately to address this challenge.

Nationwide, the dimensions of this problem are huge. Today, tomorrow, and every day for the next 17 years, 10,000 baby boomers will turn 65. (By 2035 one in five Americans will be 65 or older with a rapidly growing cohort in their 80s and 90s.) Many will live a decade longer, and much healthier, than their parents did, with current average life expectancy approaching 79 years. Even so, the anxiety list is long: Are they saving enough? Can they afford retirement? Given the current budget battles, will Medicare and Social Security still be around to provide for them as promised? And can they expect to find part-time employment that allows them to serve others, maintain a sense of self-worth, and top up their bank accounts?

Financial security has been a preoccupation of Americans of all ages since the 2008-2009 recession, but heightened concern appears to be hitting the nonprofit and philanthropic sector especially hard.  Employees old and young in our sector scrape by on depressed salaries that are not conducive to meeting current expenses much less accumulating a decent nest egg. About half of those we surveyed have considered leaving the nonprofit sector for better pay. And, in separate research on younger employees cited in this report, retirement security was the leading financial barrier to committing to a career in the nonprofit sector. This is bad for current and would-be employees and for our sector’s ability to attract and retain the new talent needed to succeed. 

Like older workers, the up-and-coming Millennials generation (80 million Americans 21-32 years-old) puts a premium on financial security. A 2012 Rutgers University study found that 91percent of college students and 95 percent of Millennials said that being financially secure was either essential or very important to them.  Having a partner or spouse ranked nearly 20 points lower in terms of importance.  Much lower on the priority list was having a job with impact or a prestigious career, or starting a family. 

What is to be done to replace the current insecurity complex with a new confidence in preparing for our older years?  At the level of individual employee actions, there is quite a lot employers can do to encourage savings. Bill Gale at Brooking’s Retirement Security Project has lead authored an AARP paper with 11 specific proposals to make saving easier, make it more rewarding, strengthen the market infrastructure for saving, provide private information to savers, and improve public education about saving. The IS/TIAA-CREF study broached ways employers could take the lead to redesign retirement programs to incorporate auto-enrollment, automatic contribution escalation, appropriate investment menu design, and the inclusion of an annuity option. There may be some ways employers can pool costs to help workers address long-term healthcare expenses. There is even talk of crafting comprehensive benefit packages that could be portable across jobs within our sector or even across sectors.

But a true long-term solution must begin with the fundamentals: a commitment to living wages and enough to retire on when the time comes. This may mean we employ fewer people, but we would do it "right" and not try to get by on the cheap. This is easier said than done. By working on the problem together, we can do well by workforce and our institutions.

Join us
Your input as an IS member is invaluable as we continue to look at how we best confront the issues most relevant to a thriving sector. Please email your comments or questions as we move this work forward. Also, look out for additional opportunities to weigh in on recommendations in 2013. We are looking toward possible solutions and will need to hear what you need to learn, as well as the lessons you have learned along the way.